Perhaps you’ve heard a little about Making Tax Digital for Income Tax or maybe this is completely new to you. As we approach the new tax year, here is some bitesize information about this as it may impact you and the choices you make in the 2025/26 tax year.
What is Making Tax Digital (“MTD”) for Income Tax?
It is a government initiative designed to modernise tax reporting for self-employed individuals and landlords. The idea is to make tax admin more efficient and accurate by requiring digital record keeping and more frequent reporting to HMRC.
Will YOU be affected?
Anyone with self-employed income and / or rental income totalling over £50k (before expenses) in the 2024/25 tax year will fall within MTD from April 2026. (This threshold reduces to £30k income in 2025/26 and £20k thereafter).
HOW will this impact you?
If you become subject to MTD, you will be required to keep digital records and submit QUARTERLY income and expenses to HMRC. This is in addition to the annual tax return. This will NOT impact your tax payments; it is merely a reporting requirement. I anticipate offering MTD management and filing as an additional service to all clients who fall into MTD.
I have emailed all clients about what this means for you and I in practical terms. If you have any queries, please contact me.
Points to CONSIDER and PLAN:
- If your self-employed / rental income fell under £50k in 24/25 but exceeds £30k in 26/27, you will fall within MTD from April 2027. You may therefore wish to keep a close eye on this because exceeding the threshold by just £1 will put you within MTD from April ’27.
- Existing clients may contact me for other personal tips and considersations.
How can you PREPARE for the changes:
Together with HMRC, I am able to offer a limited number of existing clients a free trial of voluntary MTD in 2025/26. Just email me to sign up! The benefits of this are:
- It’s an opportunity for both you and I to practice for MTD ahead of the game, get used to the records you need to keep and what digital format works best for you & I alike.
- This will allow for a smoother transition, reduced stress, and better financial management - all while ensuring compliance before the deadline.
- As MTD is voluntary for the 2025/26 tax year, you can opt in AND out at any time.
Just to reiterate, MTD changes how income is reported but not when tax is due - you'll still pay tax by 31 January and 31 July as before.
You can read more about MTD here. If you have any questions about this and my free trial of voluntary MTD in 2025/26, please get in touch. Spaces for the free trial will be limited.
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